Back to Frequently Asked Questions
FAQs:
What is due diligence? Under the law, you have a duty to look into the business you’re buying. You cannot simply sit back, and rely only on perceptions you form based on the information the seller provides. Granted, the seller may not knowingly misrepresent a business, but you have a duty to “read between the lines” from the information given, if true, and do investigation to fill in any missing blanks on your own, if possible.
For example, must you meet with people working in the company I’m buying, as part of the process of buying a business and doing due diligence?
No.
But due diligence is more than just a legal concept. Apart from legal “due diligence,” you have a duty to yourself, to make sure you’re comfortable with the deal, of course.
It may therefore be important — apart from any legal duty — for you to meet with the HR department and to review the files of the employees. At this time, you must decide whether you are going to keep these employees or if you are going to hire new employees. You will also want to meet with upper management to understand all the intricacies of the business.
Business Advisors
Also consider getting assistance in terms of performing your own due diligence in terms of buying a business.
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